This overview is based on the journal article IRIBA Working Paper 5: ‘The impact of SENAI’s vocational training program on employment, wages, and mobility in Brazil: Lessons for sub-Saharan Africa?’, by Stephan Klasen and Carlos Villalobos.
Labour market transitions in sub-Saharan Africa: a lack of productivity
The lack of skills of many young people without a post-secondary qualification in rural areas results in large numbers either remaining trapped in the declining traditional sector or migrating to urban areas. There, the scarcity of skills translates into poor labour market outcomes and a problematic school-to-work transition. This hurts not only the affected young people but also the economy as a whole, as skilled workers are critical for a country’s productivity, growth and international competitiveness.
In sub-Saharan Africa there is ample evidence of the significant role that education plays on shaping the labour market transition of young people. When comparing Brazil with some countries in the region, the data suggest that the higher levels of secondary and tertiary education in Brazil (see Figure 1) have a positive impact on the probability of finding a full-time job but do not necessarily translate into lower levels of unemployment for discouraged individuals—i.e. those aged 15–29 who are not in employment, education or training (see Figure 2).
With these challenges for sub-Saharan Africa in mind, we investigate the Brazilian vocational training system, with an emphasis on the National Service for Industrial Training (SENAI) to determine what lessons this system of training can offer sub-Saharan African countries.
The financing of SENAI and the supply of training
When it originated in the 1940s, SENAI was principally financed by all industrial companies, with a tax of 1 per cent on all payrolls serving as a contribution to the social security system. The fully levy-based financing framework tended to generate a monopoly in the training market by binding enterprises to the training institution, and thus reducing the incentive for employers to provide on-the-job training. Moreover, the lack of competition in training resulted in reduced opportunities for shop-floor workers.
However, since the 1990s the revenues associated with the sale of training services to enterprises have grown rapidly, encouraging the supply of ad hoc training courses at an affordable cost. Thus, enterprises that are unable to run their own training courses (including informal firms) now have greater possibilities to find relevant vocational training courses in a context of increasing interdependence between economic sectors, high levels of informality, the incorporation of other agents (universities, technical schools, consultants) and training modalities such as distance education.
Who is most likely to enrol in SENAI vocational training?
On average, our study finds that younger males currently employed in the formal sector with a completed secondary education, and from relatively more educated families, are most likely to enrol in vocational training courses provided by the S-system1. Consequently, the current patterns of enrolment in vocational training confirm concerns expressed in the literature—that vocational education does not particularly meet the needs of the less skilled and disadvantaged populations. At the same time, ethnic and geographical factors do not appear to play a significant role in determining the probability of enrolment. Finally, we do not find that the S-system training is used as a substitute for formal education.
SENAI’s training outcomes: improving labour market performance
Based on analysis of the Brazilian National Household Sample Survey (Pesquisa Nacional por Amostra de Domicílios, PNAD) from 2007, our findings (see Table 1) show a significant monthly labour earnings premium for trained workers aged 15–29 of 28.3 per cent in the S-system and 10.4 per cent in other training institutions, with a higher premium in rural areas and a lower premium in urban settings.
The sizeable impact of training on monthly earnings is not driven by changes in labour supply, but mainly by significant improvements in productivity (hourly labour earnings). Moreover, vocational training is associated with higher levels of formality. Unfortunately, the effects of training on women are negative in terms of hourly labour earnings, although training increases their chances of employment by about 18 per cent, independently of the training institution.
Regarding labour mobility, we find that S-system graduates are, on average, more likely to migrate than their non-trained counterparts; therefore, claims suggesting that vocational training can induce labour immobility are partially compensated by this novel evidence.
According to our estimates, training contributes to equalising regional disparities, as it explains an additional migration flow of 82,000 workers between 2003 and 2007.
S-system training contributes to reducing the wage gap between rural and urban areas—across the whole distribution of skills, rural workers benefit the most in relative terms.
Finally, the SENAI and S-system training premium on monthly labour earnings increases the gender pay gap; for workers with the same qualification level, returns to training are higher for men than for women.
In African countries, policymakers should ensure that any intervention to create or modify the vocational training system can offer different ethnic/racial groups the same development chances—as SENAI does.
They should find a proper financing structure that avoids fluctuations and uncertainties. The SENAI financing balance of a market-driven component with a stable public source can be a model in African countries, given the high levels of informality.
The focus should be on improving labour market outcomes of men and women, in urban and rural areas without increasing occupational segmentation.
Barría, Carlos Villalobos, and Stephan Klasen. 2014. ‘The Impact of SENAI’s Vocational Training Programme on Employment, Wages, and Mobility in Brazil: What lessons for sub-Saharan Africa?‘. IRIBA Working Paper, No. 5. Manchester: International Research Initiative on Brazil and Africa. Accessed 5 November 2015.
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ILO. 2013. Global Employment Trends for Youth 2013, A generation at risk. Geneva: International Labour Organization.
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1. A large set of vocational training institutions, financed with public money and managed by the private sector, of which SENAI is the main component.